The High Cost of Learning

It might have been my imagination (or perhaps wishful thinking), but in the midst of this year’s back-to-school media coverage, the issue of student debt seemed a little more prominent than usual.

At least two surveys identified the high levels of debt ($28,000 on average), and the stress — more than that of finding a job or getting good grades – that are being inflicted on students. The federal government estimates the cost of a university degree (including accommodation, tuition, food, and other expenses) to be $60,000 for a four-year degree, while a separate survey put that figure at closer to $80,000.

And every year around this time, Statistics Canada releases its revised tuition fee figures for the previous year and makes projections for the next, along with the annual percentage increase.

So, much as I appreciated the media interest in the CCPA’s most recent report, Eduflation and the High Cost of Learning, I have to admit I was surprised that the majority of the kerfuffle was not prompted by our Cost of Learning Index, but rather by our tuition fee projections over the next four years.

After all, it’s no secret that fees are increasing. I mean, even Jeffrey Simpson is on to that one, as he made thoroughly clear in his Globe and Mail column (alternatively titled “Duh! I so knew that already”). Apparently he thinks that, instead of documenting this trend of spiraling fees and rising student debt, we had just, you know, discovered it (note to self: add Jeffrey to our mailing list…). But I’m not going to quibble with timing; even Jeffrey Simpson accepts the fact that, as public investment wanes, fees are soaring (along with the debt being incurred by students as a result).

And that was the underlying theme in so many of the interviews about our report: how is this hurting students? Not if, but how. That may not sound like a controversial shift in opinion, but, believe me, it is. Because for some time, there was a convenient perception (and unfortunately, while no longer ubiquitous, it’s still out there) that a little debt was a good thing. For real. Because It Builds Character. After all, if you just “give education away for free,” the kids won’t be able to appreciate it. Am I right?

Of course education is not free. There are two ways to pay for it: publicly, through the tax system, or privately, through user fees. But, depending on income level, one way results in significant levels of personal debt. The other allows students to “pay back” the public’s investment in their education over time, through the tax system, without being saddled with an additional personal expense just as they are starting their careers and their adult lives.

Enormous benefits would be gained from graduating a debt-free generation. After all, those with student debt are less likely to have assets or own a house; and those who do own a house are more likely to have a sizeable mortgage. Other life decisions may be postponed as well, including starting a family (or moving out of your parents’ basement). Their reduced consumer power has a damaging effect on the economy; but so too does the spectre of a new generation that is, by necessity, singularly focused on finding a job — any job — that will allow them to begin making payments on their loans before the collections agencies come calling.

The topic of income-contingent loan repayment tends to rear its ugly head at about this point in the conversation. Why not just extend the repayment period by tying monthly payments to income? So, for example, an investment banker would pay his/her loan back much faster and at higher monthly payments than, say, a librarian (leaving aside the issue of compound interest, which would of course increase the total amount paid back over the repayment period. And also ignoring that income-contingent loan repayment schemes often become a precursor to further withdrawals of public investment and higher tuition fees being charged to students).

NEWSFLASH: we already have an income contingent repayment program. It’s called the personal income tax system, and it is perpetually — with built-in flexibility — tied to income. So when we download the responsibility for paying for university onto students (and make no mistake: this is a direct result of the withdrawal of public investment from 84% in 1979 to 58% in 2009) as well as the private debt that comes with it, we are in effect taxing them twice -- once through the tax system, and once again through debt repayment.

There is nothing — nothing — inevitable about this. Across the country there is an incredible range of policy decisions resulting in students paying less than $3,000 (Newfoundland and Labrador) or well over $7,000 (Ontari-ari-ario). And as for the “but what’s a cash-strapped provincial government to do?” refrain, Alberta’s tuition and other fees are cozying up to the $7,000 mark, too.

The fact is that governments have choices to make. They can tinker with campaign-styled funding gimmicks like loans forgiveness and targeted grants and loans (“click here for your tuition rebate!”). Or they can tackle the issue of affordability directly with an upfront reduction for all students, and recognize the lasting benefits that come from a debt-free, well-educated generation eager and able to pay back the public investment in them through the tax system, and in their positive contributions to society.